Managerial Economics Midterm Exam

Good luck

(Q1) You have studied one of the forecasting models in details. Answer the following: a) What is the model's name?

b) Show the algebraic form of the model and name it's components

c) Indicate when it is more appropriate to use.

d) Indicate the model's strength and limitation.
(Q2) Determine if each statement below is true or false. If the statement is false correct whoever is necessary to correct it, (negative statement is not an acceptable correction)
1 – The marginal analysis concept requires that a decision maker should base his or her decision according to the total cost and average benefit of each action.

2 – The Law of demand states that "the relationship between the quantity demanded of certain commodity and it's price is positive, all other things being constant".

3 – The decrease of rice cultivated area is one of the main cause for international increase in rice prices.

4 – Managers compare risk by looking at the statistical mean of possible outcomes.

5 – Price elasticity of demand is a measure of the responsiveness of change in the quantity demanded of a certain commodity to change in it's price.
(Q3) A market for good X has 500 identical buyers with incomes of S.R 100.000 each and utility functions [pic]
The price of Y is currently S.R 100 and the price of X is currently S.R 50
1 – Calculate each individuals utility-maximizing consumption of X and Y.

2 – What is the equation representing the individuals demand for X? (Assume S.R 100.000 income and Y at S.R 100).

3 – Illustrate graphically the changes that happen to the consumption of X and Y in the case of:
a) The government pays a price